In this Exercise, all the prices are excluding Vat unless specified

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Question 1: A person purchases an article for Rs.6200 and sells it to a customer for Rs.8500. if the sales-tax (under VAT) is 8%; find the VAT paid by the person.

Cost Price of the article $= Rs. \ 6200$

Selling Price of the article $= Rs. \ 8500$

$VAT = Tax \ Charges - Tax \ Paid$

$= Tax \ on \ Selling \ Prices - Tax \ on \ Cost \ Prices$

$= \frac{8}{100} \times 8500- \frac{8}{100} \times 6200$

$= Rs. \ 184$

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Question 2: A purchases an article for Rs.3600 and sells it to B for Rs.4800. B in turn, sells the article to C for Rs.5500. If the Sales-Tax (under VAT) is 10%, find the VAT levied on A and B.

Cost Price of the article for A $= Rs. \ 3600$

Selling Price of the article  A $= Rs. \ 4800$

VAT levied on A $= \frac{10}{100} \times (4800-3600) = Rs. \ 120$

Cost Price of the article for B $= Rs. \ 4800$

Selling Price of the article  B $= Rs. \ 5500$

VAT levied on B $= \frac{10}{100} \times (5500-4800) = Rs. \ 70$

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Question 3: A manufacturer buys raw material for Rs.60,000 and pays 4% tax. He sells the ready stock for Rs.92,000 and charged 12.5% tax. Find the VAT paid by the manufacturer.

Cost price of the raw material  $= Rs. \ 60000$

Tax paid by the manufacturer  $= \frac{4}{100} \times 60000 = Rs. \ 2400$

Selling price of the stock  $= Rs. \ 92000$

Tax charged  $= \frac{12.5}{100} \times 92000 = Rs. \ 11500$

$VAT = Tax \ recovered \ on \ sale - Tax \ paid \ on \ purchase$

$= Rs. \ 11500 - Rs. \ 2400 = Rs. \ 9100$

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Question 4: The cost of an article is Rs.6000 to a distributor. He sells it to a trader for Rs.7500 and the trader sells it to a customer for Rs.8000. If the VAT rate is 12.5%; Find the VAT paid by the:
i. Distributor

Cost Price of the article for distributor $= Rs. \ 6000$

Selling Price of the article for distributor $= Rs. \ 7500$

VAT levied on distributor $= \frac{12.5}{100} \times (7500-6000) = Rs. \ 187.50$

Cost Price of the article for Trader $= Rs. \ 7500$

Selling Price of the article  for Trader $= Rs. \ 8000$

VAT levied on Trader $= \frac{12.5}{100} \times (8000-7500) = Rs. \ 62.50$

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Question 5: The printed price of an article is Rs.2500. A wholesaler sells it to a retailer at 20% discount and charges sales-tax at the rate of 10%. Now the retailer, in turn, sells the article to a customer at its list price and charges the sales-tax at the same rate. Find:
i. The amount that retailer pays to the wholesaler.
ii. The VAT paid by the retailer.

Printed Price of the article for wholesaler $= Rs. \ 2500$

Cost Price of the article for retailer $= \frac{100-20}{100} \times 2500 =Rs. \ 2000$

Amount paid by the retailer $= \frac{10}{100} \times 2000 +2000 = Rs. \ 2200$

Selling Price of the article for retailer $= Rs. \ 2500$

VAT levied on distributor $= \frac{10}{100} \times (2500-2000) = Rs. \ 50$

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Question 6: A retailer buys an article for Rs.800 and pays the sale-tax at the rate of 8%. The retailer sells the same article to a customer for Rs.1000 and charges sales-tax at the same rate. Find:
ii. The amount of VAT paid by the retailer.

Cost price of the article  $= Rs. \ 800$

Tax paid by the retailer  $= \frac{8}{100} \times 800 = Rs. \ 64$

Selling price of the article  $= Rs. \ 1000$

Tax charged  $= \frac{8}{100} \times 1000 = Rs. \ 80$

Price paid by the customer $= Rs. \ 1000 + Rs. \ 80 = Rs. \ 1080$

$VAT = Tax \ recovered \ on \ sale - Tax \ paid \ on \ purchase$

$= Rs. \ 80 - Rs. \ 64 = Rs. \ 16$

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Question 7: A shopkeeper buys 15 identical articles for Rs.840 and pays sales-tax at the rate of 8%. He sells 6 of these articles at Rs.65 each and charges sales-tax at the same rate. Calculate the VAT paid by the shopkeeper against the sale of these six articles.

Cost price of the article  $= Rs. \ \frac{840}{15} = Rs. \ 56$

Tax paid by the retailer  $= \frac{8}{100} \times 56 \ times 6 = Rs. \ 26.88$

Selling price of the article  $= Rs. \ 65$

Tax charged  $= \frac{8}{100} \times 65 \times 6 = Rs. \ 31.20$

$VAT = Tax \ recovered \ on \ sale - Tax \ paid \ on \ purchase$

$= Rs. \ 31.20 - Rs. \ 26.88 = Rs. \ 4.32$

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Question 8: The marked price of an article is Rs.900 and the rate of sales-tax on it is 6%. If on selling the article at its marked price, a retailer has to pay VAT=Rs.4.80; Find the money paid by him (including sales-tax) for purchasing this article.

Let Cost price of the article  $= Rs. \ x$

Tax paid by the retailer  $= \frac{6}{100} \times x = Rs. \ 0.06x$

Selling price of the article  $= Rs. \ 900$

Tax charged  $= \frac{6}{100} \times 900 = Rs. \ 54$

$VAT = Tax \ recovered \ on \ sale - Tax \ paid \ on \ purchase$

$= Rs. \ 54 - Rs. \ 0.06x = Rs. \ 4.80 \Rightarrow x = 820$

Money paid $= Rs. \ 820 + Rs. \ 0.06 \times 820 = Rs. \ 869.20$

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Question 9: A manufacturer marks an article at Rs.5000. He sells this article to a wholesaler at a discount of 25% on the marked price and the wholesaler sells it to a retailer at a discount of 15% on its marked price. If the retailer sells the article without any discount and at each stage the sales-tax is 8%, calculate the amount of VAT paid by:
i. The Wholesaler
ii. The Retailer [2010]

Market Price of the article for wholesaler $= Rs. \ 5000$

Cost Price of the article for wholesaler $= \frac{100-25}{100} \times 5000 =Rs. \ 3750$

Amount of tax paid by the wholesaler $= \frac{8}{100} \times 3750 = Rs. \ 300$

Cost Price of the article for retailer $= \frac{100-15}{100} \times 5000 =Rs. \ 4250$

Amount of tax paid by the retailer $= \frac{8}{100} \times 4250 = Rs. \ 340$

Selling price of the article for retailer $= Rs. \ 5000$

Amount of tax paid by the end customer $= \frac{8}{100} \times 5000 = Rs. \ 400$

Vat paid by retailer $= 400 - 340 = Rs. 60$

Vat paid by wholesaler $= 340 - 300 = Rs. 40$

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Question 10: A shopkeeper buys an article at a discount of 30% and pays sales-tax at the rate of 8%. The shopkeeper, in turn, sells the article to a customer at the printed price and charges sales tax at the same rate. If the printed price of the article is Rs.2500; Find:
i. The price paid by the shopkeeper.
ii. The price paid by the customer.
iii. The VAT paid by the shopkeeper.

Printed Price of the article for shopkeeper $= Rs. \ 2500$

Cost Price of the article for shopkeeper $= \frac{100-30}{100} \times 2500 =Rs. \ 1750$

Tax paid by the shopkeeper $= \frac{8}{100} \times 1750 = Rs. \ 140$

Price paid by the shopkeeper $= Rs. \ 1750 + \ Rs. 140 = Rs. \ 1890$

Selling Price of the article for shopkeeper $= Rs. \ 2500$

Tax paid by the customer $= \frac{8}{100} \times 2500 = Rs. \ 200$

Price paid by the customer $= Rs. \ 2500 + \ Rs. 200 = Rs. \ 2700$

VAT paid by the shopkeeper $= \frac{8}{100} \times (2500-1750) = Rs. \ 60$

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Question 11: A shopkeeper sells an article at its list price Rs.3000 and charges sales-tax at the rate of 12%. If the VAT paid by the shopkeeper is Rs.72, at what price did the shopkeeper buy the article inclusive of sales-tax?

Let Cost Price of the article for shopkeeper $= Rs. \ x$

Tax paid by the shopkeeper $= \frac{12}{100} \times x = Rs. \ 0.12x$

Selling Price of the article for shopkeeper $= Rs. \ 3000$

Tax paid by the customer $= \frac{12}{100} \times 3000 = Rs. \ 360$

$VAT = Tax \ recovered \ on \ sale - Tax \ paid \ on \ purchase$

$= Rs. \ 360 - Rs. \ 0.12x = Rs. \ 72 \Rightarrow x = Rs. \ 2400$

Tax paid by the shopkeeper $= 0.12 \times 2400 = Rs. 288$

Price paid by the shopkeeper $= 2400 + 288 = Rs. 2688$

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Question 12: A manufacturer marks an article for Rs.10,000. He sells it to a wholesaler at 40% discount. The wholesaler sells this article to a retailer at 20% discount on the marked price of the article. If retailer sells the article to a customer at 10% discount and the rate of sales-tax is 12% at each stage, find the amount of VAT paid by the:
i. Wholesaler
ii. Retailer

Market Price of the article for wholesaler $= Rs. \ 10000$

Cost Price of the article for wholesaler $= \frac{100-40}{100} \times 10000 =Rs. \ 6000$

Amount of tax paid by the wholesaler $= \frac{12}{100} \times 6000 = Rs. \ 720$

Cost Price of the article for retailer $= \frac{100-20}{100} \times 10000 =Rs. \ 8000$

Amount of tax paid by the retailer $= \frac{12}{100} \times 8000 = Rs. \ 960$

Selling price of the article for retailer $= \frac{100-10}{100} \times 10000 =Rs. \ 9000$

Amount of tax paid by the end customer $= \frac{12}{100} \times 9000 = Rs. \ 1080$

Vat paid by retailer $= 1080 - 960 = Rs. 120$

Vat paid by wholesaler $= 960 - 720 = Rs. 240$

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